Series 79: Price/earnings To Growth (PEG) Ratio

Taken from our FINRA Investment Banking Exam

Definition of the term Price/earnings To Growth (PEG) Ratio...

a valuation metric that explicitly factors in growth expectations and helps determine whether a stock is under- or overvalued given its expected growth rate. It is calculated by dividing the price/earnings ratio by the percentage of expected annual EPS growth.

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